According to Infosys Limited (2017), 85 percent of banks have digitally transformed themselves because they cite it as a priority in 2018. Investing in technology helps to drive efficiency and management of evolving benefits and risks arising from the growth opportunities which are critical for the sustainability of a bank’s success. Statistics revealed by Global Banking Outlook (2018) show that financial institutions remain positive on their ability to enhance their financial performance in line with the rising digital transformation. However, it is unclear if banking returns on investment can survive the effect of cyclical downturn even though the quantitative process has been simplified.
1. Rising Consumer Expectations
It is evident that financial institutions have done well in adopting digital technology so that they can make their operations convenient and meet the needs of their customers but they still need to move beyond just transactional convenience by considering engagement that is more contextual.
According to Infosys Limited (2017), 77% of customers want their financial institutions to focus more on basic banking areas like transparent and fair banking. In other words, rather than financial institutions focusing on simplifying digital access they can build a strong foundation that will stabilize consumer relationships. Financial institutions can attain this by leveraging social, mobile and online platforms so that they can integrate with the lives of the consumers through advisory services, planning tools and insight-driven alerts among other techniques.
NLS Banking Solutions can help your financial institution tackle the challenge of meeting consumer expectations through its events and notification system that allows banks to use a variety of templates, notifications and basic alerts that include appropriate channels for the delivery. Research shows that customers believe that their banks do not do help them achieve their financial goals. Why not use the events and notifications system from NLS to offer customers financial advice that will help them improve how they manage their money and attain goals which are significant in their lives?
2. Inadequate Return on Investment
Shareholders normally expect a certain degree of return on investment in the financial institution. This means that banks need to generate a return on investment that is enough on a short-term basis so that they can compensate their investors for their unsystematic and systematic risks as they hold stock. However, banks and other financial institutions are not accumulating enough return on equity that the shareholders need.
Financial institutions can make more profit if they collaborate with financial technology companies like NLS Banking Solutions to offer better services and reduce their operation costs for both the organization and the customer. Improved customer service means that the bank increases customer loyalty and attracts more customers which will increase the profits and eventually increase return on investment.
3. Regulatory Pressure
The regulatory requirements for banks and financial institutions keep increasing and this means that they have to put in more money for the discretionary budget on being compliant. Additional costs also have to be directed towards building processes and systems that maintain the escalating requirements. Infosys Limited (2017) claims that banks need to anticipate more pressure from regulators as they attempt to implement reforms on the basis of rules underlying introduction of new technologies.
In general, banks and financial institutions need to adopt technology that is introduced by fintechs such as NLS Banking solutions in their banking operations so that they can apply more relevant strategies that will help them improve.
These challenges keep escalating and this means that financial institutions need to continuously evaluate and enhance their operations so that they can instill the changes of technology within the current financial and banking industry.
Infosys Limited. (2017). Fintech revolution in banking: Leading the way to digital. Infosys Limited
Global Banking Outlook (2018). Piivoting toward an innovation-led strategy